An anticlimactic ending in the Senate tonight. Neither of the big post-cloture amendments — Brownback's auto-dealer CFPA exemption and the Merkley-Levin amendment— ended up getting votes. Brownback will get a vote on a motion to instruct the Senate's conferees on Monday. Instructions to conferees are non-binding, but winning on a motion to instruct would give Brownback substantial leverage in conference, since the House bill contains an auto-dealer exemption already. So don't write Monday's vote off as unimportant just because it's non-binding; the Senate takes these things seriously, and it could very well determine whether there's an auto-dealer exemption in the final conference report. (And for the record, I think exempting auto dealers from the CFPA is an awful idea.)

I don't know exactly how it went down, but Merkley and Levin caved as well. I suspect that Reid and Dodd promised to designate Merkley and Levin as conferees with the authority to negotiate the Volcker language only. Either that, or Reid and Dodd adequately assured them that they'll "do everything they can" to protect the Volcker Rule in conference. Frankly, I hope it was the latter, since as I wrote earlier, the Merkley-Levin language was terrible. Better to get someone who actually understands the language of U.S. banking law negotiating the Volcker Rule in conference.

I know the banking industry is going to freak out about the fact that Blanche Lincoln's disastrous Sec. 716 is still in the bill, but they shouldn't sweat it. It will get stripped out in conference — everyone (save for Blanche Lincoln) recognizes that Sec. 716 simply cannot become law. Dodd knows what he's doing.

The next thing to watch is who gets appointed as conferees. In the Senate, Dodd and Shelby will obviously be conferees. Lincoln and Saxby Chambliss, as chair and ranking member of the Ag Committee, will also be conferees, although I wouldn't be surprised if they're only given authority to negotiate on the derivatives title (Lincoln's Sec. 716 stunt didn't go over well in her own caucus). Jack Reed and Bob Corker are also two likely conferees, given their superior command of the nuts-and-bolts of financial regulation.

Personally, I'm just glad we have a financial reform bill going to a conference committee that doesn't include Phil Gramm. I blame him personally for the incredibly convoluted state of the CEA (the derivatives law).

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About Me

I'm a finance lawyer in New York. I used to focus on derivatives and structured finance (you know, back when there was a structured finance market). I spent the majority of my career at one of the major investment banks. My background is in economics and, unfortunately, politics.

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